What actions did the Treasury Department take?
The Treasury Department purchased $1 billion of senior preferred stock in each company and exercised warrants for the purchase of 79.9 percent of each company’s common stock. The companies will pay a 10 percent dividend on the senior preferred stock. No dividends will be paid on the preferred or common stock. Treasury also created a credit facility for short-term borrowing by Fannie, Freddie and the Federal Home Loan banks, to be repaid with interest. Treasury will begin purchasing new mortgage backed securities later this month and can hold the MBS to maturity, based on market conditions. Additional stock will be purchased as needed. Q: What will be the effect on banks holding Fannie and Freddie’s preferred and/or common stock? A: A small number of banks are estimated to hold large amounts of Fannie and Freddie preferred and/or common stock. Canandaigua National Bank & Trust (CNB) has no detrimental credit exposure to either Freddie Mac or Fannie Mae. CNB holds no common stock, prefer
